Farmers and coffee entrepreneurs

Oct 13, 2025 by wbrum.org 135 views

Analysis of the Integration of the North Sumatra Domestic Arabica Coffee Market and the International Market

Introduction

The coffee industry is a significant contributor to the economy of North Sumatra, with Arabica coffee being one of the most popular and sought-after varieties. The domestic Arabica coffee market in North Sumatra is heavily influenced by the international market, with prices fluctuating based on global demand and supply. This study aims to analyze the integration between the domestic Arabica coffee market in North Sumatra and the international Arabica coffee market, with a focus on how the price of international Arabica coffee affects the price of Arabica coffee in North Sumatra.

Background

The selection of North Sumatra as the location for this study was carried out with the consideration that Arabica coffee exports have a very important role in coffee exports from the area. The data used in this study is a time series data which includes a period from January 2019 to April 2021, with a total of 28 observations. The analysis method applied includes the Index of Market Connection (IMC) model to assess market integration in the short and long term, as well as multiple linear regression analysis to dig deeper about the relationship between domestic and international prices.

Research Methodology

The IMC model is a widely used method for assessing market integration, and it has been applied in various studies to evaluate the level of integration between domestic and international markets. The IMC model calculates the value of market integration based on the correlation between domestic and international prices. In this study, the IMC model was used to assess market integration in the short and long term, with the results indicating a strong integration between the domestic Arabica coffee market in North Sumatra and the international market.

Research Result

The results of this study indicate that the IMC value of 0.25, which is smaller than 1, indicates that market integration in the short term is strong. This shows that price movements in the international market have a significant impact on the domestic market. Furthermore, the value of the regression coefficient from the difference in international price and the international price log shows a value of 0.594, also smaller than 1. This indicates the existence of market integration in the long run which is quite stable.

Analysis of International Price Impacts

This study provides a better understanding of how the price changes in the international market can affect the price of coffee at the local level. When the price of international Arabica coffee has increased, prices in the domestic market of North Sumatra also tend to rise, and vice versa. This is important for farmers and coffee entrepreneurs in the area, because pricing strategies must consider price fluctuations in the global market to remain competitive and profitable.

Research Relevance

The findings of this study are very relevant for stakeholders in the coffee industry, including farmers, exporters, and policy makers. By understanding the dynamics between the domestic and international markets, all parties can make better decisions in terms of production, pricing, and marketing. In addition, policies that support the sustainability of the coffee market at the local level can help increase the competitiveness of North Sumatra coffee in the global market.

Conclusion

Overall, this research indicates a strong integration between the domestic Arabica coffee market in North Sumatra and the international market. This relationship shows how important the influence of international prices on local prices, as well as the need for greater attention to external factors that can affect the coffee industry. Thus, stakeholders are expected to formulate more effective strategies to face challenges and take advantage of opportunities that exist in the global market.

Recommendations

Based on the findings of this study, the following recommendations are made:

Farmers and coffee entrepreneurs: Should consider price fluctuations in the global market when making pricing decisions, to remain competitive and profitable.
Exporters: Should take advantage of opportunities in the global market by increasing exports of Arabica coffee from North Sumatra.
Policy makers: Should implement policies that support the sustainability of the coffee market at the local level, to increase the competitiveness of North Sumatra coffee in the global market.

Limitations

This study has several limitations, including:

Data limitations: The data used in this study is limited to a period of 28 months, which may not be representative of the entire market.
Methodological limitations: The IMC model used in this study may not capture all the complexities of market integration.

Future Research Directions

Future research should focus on:

Long-term analysis: A longer period of data should be used to assess market integration in the long term.
Other factors: Other factors that affect market integration, such as trade policies and climate change, should be considered in future research.

References

[List of references cited in the study]

Appendix

[Appendix containing additional data and tables]

Table of Contents

Introduction
Background
Research Methodology
Research Result
Analysis of International Price Impacts
Research Relevance
Conclusion
Recommendations
Limitations
Future Research Directions
References
Appendix

Keywords

Arabica coffee
North Sumatra
International market
Market integration
Price fluctuations
Sustainability
Competitiveness

Abstract

This study aims to analyze the integration between the domestic Arabica coffee market in North Sumatra and the international Arabica coffee market. The results indicate a strong integration between the two markets, with price movements in the international market having a significant impact on the domestic market. The study provides a better understanding of how the price changes in the international market can affect the price of coffee at the local level, and highlights the need for greater attention to external factors that can affect the coffee industry.
Q&A: Analysis of the Integration of the North Sumatra Domestic Arabica Coffee Market and the International Market

Q: What is the main focus of this study?

A: The main focus of this study is to analyze the integration between the domestic Arabica coffee market in North Sumatra and the international Arabica coffee market, with a focus on how the price of international Arabica coffee affects the price of Arabica coffee in North Sumatra.

Q: Why was North Sumatra chosen as the location for this study?

A: North Sumatra was chosen as the location for this study because Arabica coffee exports have a very important role in coffee exports from the area.

Q: What data was used in this study?

A: The data used in this study is a time series data which includes a period from January 2019 to April 2021, with a total of 28 observations.

Q: What methods were used to analyze the data?

A: The analysis method applied includes the Index of Market Connection (IMC) model to assess market integration in the short and long term, as well as multiple linear regression analysis to dig deeper about the relationship between domestic and international prices.

Q: What are the implications of the study's findings?

A: The study's findings indicate that the price of international Arabica coffee has a significant impact on the price of Arabica coffee in North Sumatra. This means that farmers and coffee entrepreneurs in the area need to consider price fluctuations in the global market when making pricing decisions.

Q: What are the recommendations of the study?

A: The study recommends that farmers and coffee entrepreneurs consider price fluctuations in the global market when making pricing decisions, that exporters take advantage of opportunities in the global market by increasing exports of Arabica coffee from North Sumatra, and that policy makers implement policies that support the sustainability of the coffee market at the local level.

Q: What are the limitations of the study?

A: The study has several limitations, including data limitations and methodological limitations.

Q: What are the future research directions?

A: Future research should focus on long-term analysis and other factors that affect market integration, such as trade policies and climate change.

Q: What are the implications of the study for the coffee industry?

A: The study's findings have implications for the coffee industry, including the need for greater attention to external factors that can affect the coffee industry, such as price fluctuations in the global market.

Q: What are the benefits of the study for stakeholders in the coffee industry?

A: The study provides a better understanding of how the price changes in the international market can affect the price of coffee at the local level, and highlights the need for greater attention to external factors that can affect the coffee industry.

Q: What are the next steps for the study?

A: The next steps for the study include further analysis of the data and the development of recommendations for stakeholders in the coffee industry.

Q: How can the study's findings be applied in practice?

A: The study's findings can be applied in practice by farmers and coffee entrepreneurs who need to consider price fluctuations in the global market when making pricing decisions, by exporters who can take advantage of opportunities in the global market by increasing exports of Arabica coffee from North Sumatra, and by policy makers who can implement policies that support the sustainability of the coffee market at the local level.

Q: What are the potential applications of the study's findings?

A: The study's findings have potential applications in the coffee industry, including the development of pricing strategies that take into account price fluctuations in the global market, the identification of opportunities for exporters to increase exports of Arabica coffee from North Sumatra, and the development of policies that support the sustainability of the coffee market at the local level.

Q: What are the potential benefits of the study's findings?

A: The study's findings have potential benefits for the coffee industry, including increased competitiveness, increased revenue, and improved sustainability.

Q: What are the potential challenges of the study's findings?

A: The study's findings may present challenges for the coffee industry, including the need for greater attention to external factors that can affect the coffee industry, such as price fluctuations in the global market.

Q: What are the potential opportunities of the study's findings?

A: The study's findings may present opportunities for the coffee industry, including the development of new pricing strategies, the identification of new markets for Arabica coffee from North Sumatra, and the development of new policies that support the sustainability of the coffee market at the local level.